The high power consumption in cryptocurrency mining has been a significant concern for various countries across the globe. Iran, since 2021 keeping in view the power requirements, has made various changes to the regulatory framework involving cryptocurrency mining.
In 2020, following an influx of illegal crypto mining activities, the country decided to legalize it, but in May, it was banned by the country’s president of Iran due to power blackouts and worsening air quality in various cities till September 2021. Later in October, the ban was lifted, and mining was allowed again. However, it was short-lived as foreseeing the power shortages in the summer of 2022, the country placed a ban again in June, but in July, the authorities suggested an alternative method to use renewable energy for mining.
As reported by Todayq in August, over 18 months, the mining operations have used over 250 megawatts of electricity, a significant amount for a country facing power shortages.
According to a report published in the country, the National Iranian Gas Company, a subsidiary under the Ministry of Petroleum of the Islamic Republic, has alerted the cryptocurrency miners regarding the hike in prices of natural gas. The hike is stated to be retroactive, i.e., enacted already, and said to be applicable since the start of this fiscal year, i.e., from March 2022. Hence, the electricity bill for the past six months would now be applicable under the new tariff rates.
The new tariff rates specify a cubic meter of fuel would cost 53,368 rials (around $1.25), almost double the old price, which was 29,440 rials (around $0.70). The prices would also be accompanied by value-added tax (VAT), which is 9% currently.
Abbas Ashtiani, the chief executive officer of the Iran Blockchain Association, a nonprofit and self-governing community of blockchain enthusiasts who work to develop this technology, called this rise in prices a violation and raised his opinion that the new tariffs should not have been implied during the first half of the fiscal year.
Most crypto farms in the country depend on gas supplies, and with the rise in prices, the firms are bound to undergo heavy losses. The authorized mining firms pay electricity rates at the export prices, and the gas prices are set at around 70% of the export average. The local crypto community counts this price surge as the wrong policy. It states it to be highly damaging for them, along with other factors like internet disruptions and legal procedures.
Following the Russian invasion of Ukraine in February, there has been global tension regarding gas prices; however, in Ashitiani’s opinion, the Iranian tariff rates only adjust to the increasing prices and not when the prices decrease.